Summary of Colorado’s Automatic Renewal Law featured image

Summary of Colorado’s Automatic Renewal Law

by John DiGiacomo

Partner

Internet Law

For consumers, one of the more confusing aspects of consumer service contracts are legal provisions that automatically renew the contract at the end of the contract’s term. This is particularly frustrating when new charges are invoiced to a credit card or other payment source. A consumer believes the service is for a month or a year, but, suddenly a charge appears and the service has been automatically extended. Sometimes, this can result in severe financial consequences if the automatic renewal charges cause a non-sufficient funds or overdraft charge to be incurred.

Many state legislatures have recognized the problem and have enacted consumer protection statutes dealing with these types of automatic renewal in consumer contracts. These tend to go further than the federal Restore Online Shoppers’ Confidence Act (“ROSCA”) which was enacted in 2010. Part of the ROSCA dealt with automatic renewal provisions. Under ROSCA, such provisions are termed “negative option features.” This is a type of feature where a consumer’s silence or failure to take action is deemed by the seller as an acceptance of the renewal option. Under ROSCA, such features are prohibited unless:

  • The feature is clearly and conspicuously disclosed
  • Express and informed consent is obtained in advance and
  • Consumers have a “simple mechanisms” to stop recurring charges

Colorado enacted a law that took effect at the beginning of 2022 that is modeled after ROSCA but goes further. The Colorado automatic renewal law applies to any sort of consumer contract and applies regardless of how “negative option feature” is defined. Rather, application of the law depends on whether the contract contains an auto-renewal provision/feature. Like ROSCA, the Colorado statute requires that all renewal terms AND cancellation features must be explained to consumers in a manner that is “clear and conspicuous.” Consent is needed before any charges can be taken from credit cards or other financial instruments. In addition, there must be an “easy” method of opting out and/or terminating the auto renewal. Further, if the automatic renewal is for month-to-month services, the provider must provide monthly notice of the renewals — called a “monthly reminder.” For contracts and services that auto-renew on a term longer than month-to-month, the reminder must be sent 25 to 45 days before the auto-renewal date. Finally, the Colorado statute bans contracts that have payment periods exceeding two years and requires that an auto-renewal contract must be released if the customer dies or becomes disabled.

The Colorado law is very broad — unlike some state statutes — and basically applies to any consumer contract with an auto-renewal feature. The statute applies to services and to contracts for continuous shipment/provision of goods and products.

In terms of enforcement, there is no private right of action. Enforcement is handled by the Colorado Attorney General’s Office.

Contact the Auto-Renewal Contract Attorneys at Revision Legal

For more information, contact the experienced Automatic Renewal Contract Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.

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